Global Markets Await Crucial Economic Data
As the new year begins, global stocks are on the rise, albeit cautiously, ahead of a packed week of U.S. economic data that will set the tone for interest rates. The MSCI All-World index edged up 0.1%, reflecting a mixed performance in Europe, where the STOXX 600 and Germany’s DAX both rose 0.1% and 0.2%, respectively.
China’s Yuan Hits 16-Month Low
Meanwhile, in China, the yuan plummeted to a 16-month low, and blue-chip stocks traded at their weakest since late September. The country’s stock exchanges and central bank were quick to defend the falling markets, attempting to soothe investor concerns about the impact of Donald Trump’s return to the White House on the world’s second-largest economy.
Political Uncertainty Weighs on Markets
Reports of Canadian Prime Minister Justin Trudeau’s potential resignation sent ripples through the markets, although the U.S. dollar fell 0.4% against its Canadian counterpart. Markets seem to have priced in the possibility of an election, which could bring much-needed clarity to the situation.
U.S. Economic Data Takes Center Stage
This week, investors will be closely watching a slew of U.S. economic data, including Friday’s December employment report, which is expected to show a rise of 150,000 in nonfarm payrolls and an unchanged unemployment rate of 4.2%. Additionally, data on ADP hiring, job openings, and weekly jobless claims will provide valuable insights into the state of the economy.
Federal Reserve in Focus
Minutes from the Federal Reserve’s last meeting, scheduled for release on Wednesday, will offer a glimpse into the thinking of Fed officials. Top policymakers, including influential Fed Governor Christopher Waller, will also take the stage to share their views. Markets have already scaled back expectations for rate cuts in 2025, with only 40 basis points now anticipated.
Yields Rise, Dollar Weakens
In fixed income, U.S. Treasury yields rose for a second day, nearing last week’s eight-month high. The sale of $119 billion in new Treasuries this week will test investor appetite. The dollar index, which rose 0.9% last week, fell 0.3% on Monday, largely due to gains in the euro and sterling.
Oil Prices Supported by Cold Weather
Oil prices found support from colder weather in Europe and the United States, but early gains faded, with Brent falling 0.4% to $76.22 a barrel. European natural gas prices, however, fell 1% to 49.10 euros per megawatt hour, near 14-month highs.
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